First-time buyers James and Jade are looking to buy their first home together near Potters Bar for £350,000 and the Budget stamp duty cut will save them £5,000

First-time buyers are cashing in on stamp duty cuts by slashing hundreds of pounds off their mortgage bills.

Mortgage brokers say they have received a flood of calls since the Chancellor axed the duty for first-time buyers on homes worth up to £300,000 in last week’s Budget.

And some are using the money they save on stamp duty to save even more money by bringing down their mortgage costs.

Those purchasing homes worth up to £500,000 will not pay the tax on the first £300,000.

This provides a major boost to home buyers in expensive areas, such as Jade Branigan, 22, and her partner James Shipton, 24, whose first home in Potters Bar will cost £350,000. The stamp duty cut will save them £5,000.

Brokers say that many first-time buyers are choosing to use the money they had earmarked to pay this tax bill to put down a bigger deposit on their new home.

By doing this, some can save more than £1,300 a year by getting a better mortgage rate.

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For example, the best rate available for borrowers with a 5 per cent deposit is Yorkshire Building Society’s 3.39 per cent two-year fixed deal.

On a £150,000 mortgage the payments work out at £742 a month.

By putting down an extra 5 per cent of the property price the same buyer would be able to apply for Yorkshire BS’s top 1.89 per cent two-year fixed rate for borrowers with a 10 per cent deposit.

On a £150,000 mortgage it costs £628 a month. This would save them £114 a month.

First-time buyers are cashing in on stamp duty cuts by using the money to put down a bigger deposit instead and slashing hundreds of pounds off their mortgage bills

Jade Branigan, 22, and her partner James Shipton, 24, are considering whether to use some of the £5,000 they’ll save in stamp duty to bring down their mortgage costs.

The couple, who currently live with their parents, are looking to buy their first home together near Potters Bar, in Hertfordshire, for around £350,000.

The Chancellor’s tax cut means they now have to find just £2,500 to pay stamp duty instead of £7,500.

Jade, a merchandiser for a London jeweller, says: ‘It means we can top up our deposit, buy things for the house and start looking right away.’

The maximum that first-time buyers can save is £5,000 after the government permanently scrapped stamp duty up to £300,000 for them.

Buyers purchasing first homes that cost up to £300,000 will pay nothing in stamp duty. The tax will also be slashed for first-time buyers spending up to £500,000, though only the first £300,000 will be stamp duty free.

Research firm Jeffries estimates that the average first-time buyer spends around £165,000 on their first home. The stamp duty cut will save them £800. However, the cut will make a more meaningful difference to thopse buying in London and the South East, where first-time buyer proeprties regularly hit £300,000 or more.

FIRST-TIME BUYER STAMP DUTY EXEMPTION: WHAT YOU SAVE

Property purchase price

Old stamp duty

New stamp duty for first-time buyers

£150,000

£500

nil

£200,000

£1,500

nil

£250,000

£2,500

nil

£300,000

£5,000

nil

£350,000

£7,500

£2,500

£400,000

£10,000

£5,000

£450,000

£12,500

£7,500

£500,000

£15,000

£10,000

Will cutting stamp duty drive up house prices?

The Chancellor axed stamp duty for first-time buyers in the Budget up to £300,000, but his own watchdog claimed it would drive up house prices.

So is the Office of Budget Responsibility right? On this excerpt from the This is Money podcast, Simon Lambert explains why he thinks its logic is flawed and that we need to be even more radical on stamp duty - maybe even making the seller pay.